Financial expert, psychologist, friend. Financial advisors can wear many hats and choosing the right one can make all the difference to your wealth, but how do you find the right one for you? Once upon a time, you might have walked into your local bank branch and they would have referred you to someone – in the post-FFA and banking reform world, the internet is a more likely place to start – but that’s not is not the only step. Here’s what you need to know to choose the right financial advisor for you.

Know when you need financial advice

People decide to seek advice for a variety of reasons – sometimes it can be triggered by a change in their financial situation, such as an inheritance; for others, it may be a lack of time to do it themselves or a need for support in complex situations.

It should be noted that financial advice does not have to be long-term – you might have a temporary situation where you need short-term help, such as insurance, but the type of relationship you need and you want will dictate who you work with.

“I think if I could change one thing it would be this notion that advice has to be end-to-end. This is not the case. It’s like getting married before a first date. We must agree that advisors can provide services on a separable basis. »

Charlie Viola, Pitcher Partners Sydney Wealth Management

Your financial goals v the specialties of your financial advisor

Part of the role of a financial advisor is to help you establish your financial goals and a strategy to achieve them, but it’s a good starting point for knowing what you would like to achieve. For example, are you trying to pay off a mortgage? Trying to generate a stream of investment income to supplement your working income? Need to save for your studies? Or about to retire?

Different financial advisors often have different specialties which can determine whether they are the right person to talk to – for example, if your goal is to have an advisor manage your portfolio of individual stocks, selecting one who specializes in global strategy rather than stock picking. would be a bad decision.

“Specialization becomes a differentiator because it allows us to dig deeper into each individual, their needs, and it also positions us well to adapt to the changing consulting needs of our clients over time. Personally, I specialize with High Net Worth clients and more complex needs, such as SMSFs, tax structuring and more bespoke investments.

James McFall, Performance-Based Financial Planning

Financial advisors and financial advisory firms will usually have a Financial Services Guide (FSG) which covers their services, fee structure, whether they are company owned, any product providers they are linked to and their Australian license of financial services (AFSL).

Some counselors offer a free first session where you only pay if you decide to follow their advice.

Check license

Liar, Liar podcast listeners know that checking the Australian Financial Services License (AFSL) and verifying that the license belongs to the person you hire is crucial.

You can start by checking the Financial Services Registry on the MoneySmart website. If you received a license number, check that the name matches the person you are talking to. You can also use the registry to find a counselor near you if you don’t know who you want to talk to.

In order to give you personalized advice, financial advisers may either hold their own AFS license or be an authorized representative of an AFS licensed company.

You can also check if your financial adviser has been banned or disqualified from giving advice by searching ASIC.

Human or robot?

Roboadvice is becoming more and more popular and is a lower level of financial advice service. It is automated financial advice generated by computer algorithms covering your finances and goals.

The way it usually works is to recommend a pre-packaged investment portfolio based on your answers to a simple questionnaire – for example, it may direct you to a high growth portfolio if you have a longer investment time frame and that you are comfortable with a higher level of risk in your investments. To offer lower costs, many portfolios use a combination of exchange-traded funds (ETFs) to provide broad market exposure at a lower cost.

This is generally a cheaper way to access financial advice as it is a more restricted offering. It is better suited to simple financial situations and goals than those that may be more complex or sensitive. For example, it would not be suitable for those who use a trust structure for their investments.

This can be a toe-in-the-water way for those not really into the full advice package.

Financial advice from a human, on the other hand, allows for nuanced advice – and even within this, some financial advisors may offer varying levels of service that vary by how often they meet, how often a portfolio can be rebalanced, the strategy, the types of investments used.

Other threads on roboadvice:

The art of financial advice – Damien Klassen | Livewire (livewiremarkets.com)

Is robo-advisory the future of financial planning in Australia? – Australia ETF Securities | Livewire (livewiremarkets.com)

Preparing for the first date – a checklist for your financial advisor

There are some things you will need to bring to your first meeting with a financial advisor and depending on the state of your finances this could take a little time.

Your financial adviser needs a full understanding of all your assets and debts, income, expenses, any insurance policies you hold, whether you have a will or power of attorney and contact details for attorneys and accountants (if you have any).

Five questions to ask yourself the first time you meet with a financial advisor:

  1. What is and is not included in advice (called “the scope of advice”)
  2. Fee structure and method of payment
  3. How often will you meet to review your strategy and progress and the level of information you will receive
  4. What level of access they have to your investments
  5. When they will consult you for permission to act on your investments

A meeting of spirit and personality

It should come as no surprise, but it’s important that you like your financial advisor and get along with them. After all, you will be entrusting this person not only with your money, but also with some of your most personal information. For example, you may need to tell your financial advisor about your medical condition to choose insurance coverage or to plan mobility changes. Or you may need to discuss what you want to happen to your estate after you die – will the children inherit? Or the local dog shelter?

“Financial planning isn’t just about understanding the numbers, it’s about really getting to know a client, understanding who they are as a person and what’s important to them – after all, we’re all very different.”

Nicola Beswick, FMD Financial

If you can’t discuss personal matters with your financial adviser, their advice is unlikely to really cover your situation and needs.

It’s good to have a “first date” with a counselor to decide if you’re compatible – and it’s also good to switch counselors if the relationship isn’t working out for various reasons. This is also not a one-sided decision, many financial advisers are also keen to select clients they feel they can work well with or have the right specialization to help them.

You’ve found the right financial advisor for you, now what?

Generally, you will receive a proposal for advice and fees from the financial adviser. If you accept it, you will have another meeting with the financial adviser to go into the details of your finances and your situation before receiving a statement of opinion (SOA). An SOA will describe the strategy recommended by your financial advisor and the costs involved in implementing it. You may also have ongoing counseling sessions as part of your relationship with your financial advisor depending on what you have agreed together.

Begin

A visit to the MoneySmart website for a list of financial advisors near you might be a good place to start.

Or you can also read about some financial advisors in our series, Meet the Advisor.

Frequently Asked Questions

1. What does a financial adviser do?

A financial adviser helps you with financial advice and management in a range of areas, such as investments, insurance and estate planning.

2. How to set financial goals?

One way to set financial goals is to consider your current and future needs and wants. Then consider the costs that might be involved in meeting those needs and wants and the resources you already have, such as career income, to meet those costs. A financial advisor can help you set financial goals as well as the timelines and strategy for achieving them by considering your assets, liabilities, and income holistically.

3. What are robo-boards?

Roboadvice is an online automated financial advice generated by computer algorithms. It usually requires investors to complete a basic questionnaire in order to make basic recommendations.

4. Where can I find a financial adviser?

There are several ways to find a financial advisor. Google searches, MoneySmart website, banks and wealth institutions are an option. You can also consider recommendations from friends and family, but be sure to check the license before using recommendations.

5. How do I verify an Australian Financial Services License (AFSL)?

You can check if your financial advisor has an AFSL by using the Financial Services Register on MoneySmart. Financial advisors usually list their AFSL on their financial services guide and website – you can also check AFSL matches on MoneySmart.